We present a murine model of trilateral retinoblastoma. Ocular retinoblastoma and central nervous system tumors are observed in a line of mice formed by the transgenic expression of SV40 T-antigen. An oncogenic protein known to bind to the retinoblastoma gene product (p105-Rb) is specifically expressed within retinal cells in this model. All animals that carry this genetic alteration develop multifocal retinal tumors. Midbrain tumors are observed in 15% of ocular tumor-bearing animals, and these arise ventral to the cerebral aqueduct at the level of the pineal gland. Both ocular and central nervous system neoplasms are heritable in heterozygous offspring through 10 sequential generations of breeding. Retinal tumors display the gross appearance, invasive properties, light and electron microscopic features, and immunohistochemical staining characteristics of human retinoblastoma. The light and electron microscopic characteristics as well as immunocytochemical features of undifferentiated midline central nervous system neoplasms further correlate with human trilateral retinoblastoma. We postulate an alternative mechanism of retinoblastoma tumorigenesis that involves functional inactivation of retinoblastoma protein locally in the face of an intact retinoblastoma gene locus.